Devin Miller is the founder and CEO of Miller IP Law, a patent and trademark firm that focuses on helping startups and small businesses maneuver the world of patents, trademarks, and copyrights. We discuss intellectual property, the pros and cons of franchising your business, and analyze how trademarks work worldwide.
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Let Gorillas Fight Your Trolls With Devin Miller
Our guest is Devin Miller, who is an IP and patent attorney, or patent attorney rather, for startups and small businesses from Salt Lake City, Utah, as you can see behind me. He is also the founder and CEO of four startup companies in Mountain Green Engineering, which helps startups and small businesses develop prototypes and products. And also others are called Custom LDS and OVOD, Snapple Solutions and SmartWolf, something to do with dogs, I suppose. He also holds four degrees, a law degree and an MBA from Case Western, and an electronics engineering and Mandarin Chinese bachelor degrees from Bingham Young University. And I’m not done yet, he is the host of the Inventive Journey podcast. So it’s kind of mind boggling how many things you do. Welcome to the show, Devin.
Thank you for having me on. Your introduction makes me sound a lot cooler than I probably am, but I’ll certainly take it, so thanks for having me.
I’m just piling the pressure on so that you know that the expectation is now very high and you have to perform here.
So how do you – I mean, you’re still young, quite young, right? You’re not yet 40, and you have a budget.
No, last week I turned 37, so married for 13 years have four kids and turned 37
Yeah, so you’re really not wasting your time and so many degrees so many companies. I mean, how do you keep up with that?
You know? Probably, the best answer is you know my always like to joke when people ask me what my what my hobby is I always say startups and there’s probably a lot of truth to that in the sense that Most of the you know other people like to watch sports or other people like to read books. I still like to read books and I’ll watch TV, but more often than not, when I have free time or I’m out for a jog or anything, my mind tends to wander towards business and learning and other things. So, it gets naturally geared that way. I don’t know if there’s any better reason.
So. what do you like about startups? What is it so exciting about startups?
I guess, what do I not like about it? I mean, startups are fun in the sense that it’s fun to take an idea from a conception stage where you just think, wouldn’t this be cool? Wouldn’t it be nice if, and then start to actually work out the solutions and work out how to figure that out. And for me, it’s that early stage fun to figure it out, get it up and going, actually implement it. It’s the way that it really makes a fun job to have and a fun way to do it. So that’s where a lot of times, you know, I have a few different interests and I’ve got a few different ways with the different businesses, but it’s kind of that, hey, this would be a fun idea, a fun thing to do, and then I can figure out, is there a business case around it and how do I bring it to market?
I understand that you probably made these companies through your IP attorney work, so maybe that’s connected. So why did you become, did you become an IP attorney because you went to work with startups or that’s totally unconnected? How did you find that niche? I mean, you’ve done a lot of things, so it’s not like you didn’t dabble in many things, many different things.
Really, I’d probably say it goes back to when I was kind of wrapping up my undergraduate and you mentioned I did Chinese and electrical engineering and I came out of engineering saying, I enjoy engineering but I don’t want to be an engineer, in the sense that I don’t want to be stuck on one project for months or years on end. Most of the time when you’re an engineer, to work your way up to the company or really have an impact on it, you have to work there for 10, 15, 20 years. And so I’m saying I didn’t want to go down that route.
And so I was kind of graduating, deciding what I wanted to do when I grew up, so to speak. And I decided, you know, I really kind of have two passions. I love startups, small businesses, always kind of had that desire to do something. I also found the law and the legal aspect interesting. So when I went and did graduate school, I kind of pursued both. I said, well, rather than choose one, I’ll do an MBA for the business side, I’ll do a law degree for the legal side, and then I’ll mesh them together.
So it wasn’t really that I necessarily started down the legal route and then came to entrepreneurs. Really I had both desires, and so I’ve kind of always, throughout my whole career, been chasing both of them in parallel. So my first business I started while I was doing my MBA and law degree at the same time, started as a business competition. So just to give you kind of a background as to how busy my life was at that time, I was doing two degrees, a law degree and the MBA degree.
I was working 20 hours as a law clerk. I just had my second kid, so I had a newborn. And I decided I was going to start up a small business that has grown now to a nine-figure business. And so between all of that, I just, it’s always been kind of the split between I love the legal and I love the startup, and that’s kind of where I’ve always meshed it together.
That’s amazing. So how can you be a CEO for different businesses and plus a practicing attorney, not to mention your home chores that you probably have a couple as well?
Lots of juggling. So, I mean, no, I mean, I give a lot of credit to the team that supports and is around me. So without them, I don’t think I’d ever be able to do all of it myself. I know I wouldn’t be able to, so I have, in addition to myself, the law firm, I have other attorneys that also assist me with the legal work. So I do legal work myself, I also have other attorneys that do legal work, so that helps to grow. I have a great marketing team, I have a great paralegal.
On the other companies, I have great engineers and software. So a lot of it I think is choosing the team around me that allows me to pursue those different interests and have that diversity of the businesses that I run because I have people that I can trust and I can hand things off to that I know will get a great job so that I can kind of keep that higher level kind of managerial focus of what’s the direction, where should we go in, where’s the next opportunity as opposed to always diving into the weeds on every company and having to manage it myself. So it’s kind of that ability to have those good trusted people that allows me to run all of them.
Are you using any frameworks to manage your companies or it’s all intuitive? Are you using any systems or processes that you found is useful for you to keep everything together and going forward?
The short answer is yes. Each company is different. They all have their own kind of things, but take the law firm as an example. One of the things that a lot of law firms don’t do that I think is a great tool is to use a CRM. I don’t do anything conventional. I don’t use a CRM or client retention management system, whatever they call it, in the conventional way, but really what I looked at is we have a high degree of automation and a high degree of customer service.
And those things typically don’t go hand in hand because typically the more you automate things, people, you get the automatic tone or dial that you wait on. You try and go through five different menus that you get to the wrong person. They say, I have to transfer you. It did get disconnected and you start all over again. I hate those. So we’re not that, but what I looked at is saying, okay, if I’m going to be able to manage the law firm and along with the other things, where are the points that we can automate? What are the emails that we can really, it’s the same repetitive email that we’re doing every time.
Every time we’re having a follow-up in five or seven days, why not do a follow-up that’s automated but then we also build into that, where are the touch points to where we need to actually have human touch, to where we need to give them updates, we need to reach them out. And then we get reminders, so myself and the attorneys and other people get reminders, hey, you need to reach out to this person, hey, these emails, they haven’t opened it up, they haven’t responded, check in with them, give them the updates.
And so a lot of that has really been looking for a system that keeps me, everything on track, keeps the reminders, keeps the touch points, and also gives a high degree of customer service and human interaction, kind of has made it a well. So we use one of the systems we use, we use a few, HubSpot is a big one that’s a driver, a lot of our back end that allows us to really kind of manage all of that, keep all the client interaction, and keep things moving.
Awesome. Anything else that you’re using, something that you feel like really worked out for you?
It’s been one where we wouldn’t be able to keep as many clients happy as we would without it, in the sense that if we didn’t have it in place, they wouldn’t know what the status is, what the progress is. We wouldn’t be able to follow up with them where things are at. We wouldn’t be able to give them those status updates.
We won’t be able to let everybody know what’s assigned to them, how it’s assigned to them, what are the expectations. It was a lot of work on the front end, but it gives a lot of dividends on the back end. So I’m a big proponent of where automation makes sense, automating things. It allows you to not only to automate things that should be automated, but for the things that shouldn’t be automated, for the touch points, it allows you to really make sure you have that high level of customer service so they have that human interaction.Automation isn't a replacement for human touch; it's the tool that amplifies our ability to provide clients with timely updates and personalized attention. Click To Tweet
So yeah, so I get that. So you use HubSpot at the back end. Are there any other systems that you use that you have found really useful?
Yeah, I like, so Zapier is another one that we use and that allows you to integrate a lot of systems together. I use FreshBooks for accounting and that one has some integration with other systems. Another one that I love is it’s called BombBomb, and it’s a video that allows you to integrate with emails, and so it allows you to have that touch. So a lot of times, and I have my board here that I’ll write their name on it, so I can have their name so that they know that it’s not just a stock video or one that’s been recorded over, but allows me to, when I am reaching out to a client, rather than just send them a cold email and it’s sterile, they don’t have a lot of emotion, doesn’t create much of a touch point, rather it allows us to reach out to them, have a personalized discussion, and make sure that it’s having that high level touch point. So I’m a big proponent of BombBomb as well.
I love that. I used BombBomb, I tried the onBomb, and I even used the whiteboard, but I never thought about customizing it and putting the client’s name on it. I think it’s brilliant. I’m going to steal that.
You’re welcome to steal it. No, I love it because then when they see the video, they see that their name’s on it, they know that it’s to them, and it’s not just a general video that everybody sees.
No, that makes a lot of sense. Yeah, that’s great. So talking a little bit about intellectual property, so let me ask you a stupid question. Why should someone create intellectual property?
It’s certainly not a stupid question. I want them to answer all the time. And the short answer is some people shouldn’t. It’s not for everybody. And I would say that there’s a strategy and looking at when it makes sense and when it doesn’t for different businesses. So maybe as a level set, let me introduce what is intellectual property, and then we’ll talk a little about when you might need it. So intellectual property is kind of an umbrella term that kind of incorporates three different things. It’s patents, trademarks, copyrights.
Patents are for inventions. If you invent something, the functionality, if it does something, that’s for a patent. Trademarks are for brands. Name of a company, name of a product, a logo, catchphrase, that’s going to be trademarks. Copyrights are more for creative works, something that’s a book, a video, a picture, a sculpture, a painting. Something that’s creative is going to be a copyright. So when you need a copyright or a trademark or a patent intellectual property, it depends on what your business is. So give me an example.Patents are for inventions. If you invent something, the functionality, if it does something, that's for a patent. Trademarks are for brands. Copyrights are more for creative works. Click To Tweet
If you’re making the next great iPhone, you’re putting in a ton of R&D, blood, sweat, and tears, time and effort and investment, and you’re saying, well, once we create it, a lot of times once you make an invention, it’s obvious to everybody, it’s easy to knock off, but it’s that initial developing it, figuring out that it’s really the creativity and where your value is, then you’re saying we need to protect that. So if somebody else comes along, we don’t have that they knock it off, that they can copy it, and then all of that time and effort and money that went into development is now out the window.
So, you know, that’s when you might consider, hey, we’re a startup and a business, we’re making something. On the other hand, you may just say, we’re a great brand company. Think of Starbucks, M&Ms, Coca-Cola, Pepsi, all of those, they’re really brand companies because they have a very big following, people know their products and they’ve created that. It’s not necessarily they’ve created something that’s an invention that’s a widget.
So that one is really going to be, hey, we need a brand, we need to protect that. And that’s where you kind of look out for your strategy. When you don’t need it, and then I’ll take a pause, you know, sometimes if you’re a small, locally based mom and pop shop, and I love mom and pop shops, nothing against them. And if you’re just gonna serve a local community, you probably don’t need to worry about any of those. You’re going to say, hey, we’re just going to serve the local people that live around us.
We have a restaurant, we have a small service industry. We don’t want to expand, we don’t want to grow. We don’t want to be the next big company. We just like what we’re doing. Then it doesn’t make sense to do it. So you really have to say, where’s the value of our business? Where is it going? And then do we want to protect that?
So, let’s say I’m a company and I have some processes and I’ve got some brands, I came up with some brand names and I want to protect that. Going forward, how do I manage my IP and how do I expand my IP? So what are the strategies for that?
So how do you manage your IP and how do you expand it? First thing is I do it as, it should be a strategy and thought that goes into it. So when you think of a strategy, first I would say you go to an attorney, you go to someone that is going to know what they’re doing, that’s the easiest way. And I know it’s a self-serving answer because I’m an attorney, I run a law firm, but a lot of attorneys, you’re going to say, hey, a lot of them, and us included, they’ll sit down with you for a few minutes, talk about what you’re going, free of charge, give you some direction, give you some thought, and those are the ones you’re going to do.
But now as you dive into it, first question I’d ask is, what is the value of our business? It kind of goes back to the original thing. I’d say, where do we see the value of our business? Somebody were to come along and knock it off or to copy it, would it hurt or would it not hurt? And then that’s where you’re going to start at. So if you’re saying brand, oh, we’ve got a great brand, customers love us, we get great reviews, we don’t want someone else using the same name, using the same thing against us. I would start with the value.
And then I would, as the company grows and as it progresses, you should probably set in a three, every three or six months, no longer than a year, check in, see what the company’s evolved and how it’s developed. Because my experience is no startup ever ends up where you initially think it will. You always should have a plan. The plan never goes according to plan, but you should, as you evolve, as you pivot, you should say, okay, now where’s the value of our business? What have we done in the last year? What have we done better? What have we improved?
Have we rolled out new products? Have we rebranded? Have we done a new widget? Have we done a new, you know, something creative that we want to protect? And if you say, nope, we haven’t, then you just continue on your way. And if you have, then that’s the point where you say, okay, now do we want to protect that? Does that have that value that we want to put with the company.
Is it possible to trademark generic English words that are in common use?
Maybe. So I’ll give you two examples. One yes, one no. So let’s say you wanted to start a company that you were going to sell the fruit. You’re going to sell an apple. So you’re going to go set up your fruit stand. You’re going to sell the world’s best apples. And so you name your fruit stand, Apple. You’re probably not going to get a trademark because what your name of your company is literally describing what you’re selling. Everybody calls an apple an apple for the fruit, and so you’re not going to be able to stop other people from using an apple for the name of their company, or for the products that they’re selling.
So, that one, in that case, you’re not going to be able to trademark that generic term. Give you a separate example. Apple is a smartphone company that has nothing to do with smartphones, has nothing to do with consumer electronics. And so you can use that generic term, Apple, for consumer electronics. So it kind of depends how are you using that generic term and under what circumstances. Some of them, yes, some of them, no. And it kind of depends on the goods and services, what the business is and how you use it.
That’s interesting. So when you invest in these startup companies, I mean, you’re the founder CEO, so maybe you came up with these things, and you’re not just invested with client companies. I don’t know the details, but is there an IP angle that you take that you’re looking for businesses that can create intellectual property, and is this part of the strategy, or it’s just an accidental thing that they maybe have and maybe not have IP?
So all but one of my companies have really been, but I had myself and a few other people that I have worked with before at Trust and I have a good relationship with one, one of which is my father, which is also an electrical engineer. So most of the companies I’ve come up with have been from the ground up, came up with the idea, built the company, and it hasn’t been investing in other companies. Not that I don’t think there are a lot of cool ones, but the question I often get when we have clients walk in the door with the intellectual property law, Miller IP law, is, hey, instead of me paying you, why don’t you just take a portion of the company?
Why don’t you take some equity ownership? And a few problems with that typically is, one is, most of the companies I don’t do due diligence on. That means I don’t know what the market share is, I don’t know who the team members are on, I don’t know how well it’s funded, where it’s vested, who I’m going to be working with. It would require me to do a high level of due diligence, the same as if you were to go to any other investor, and we’re not necessarily able to do that for every company.
The other hard thing is, how do you evaluate a company when it’s early stage, when it’s just an idea stage, and most of the time I’d have to say, well, what else are you putting in, and what else am I putting in, and how do you balance that out, and most of the time they’re saying, well, I’ll put in some sweat equity, and then you’ll front all the cash, and cash is always king, and so that one’s always hard.
And the last thing is, is that, you know, when you try and approach and try and do that, the business model is set up to be paid, right? Miller IP law, if I took, I don’t have an exorbitant amount of funding that I could just fund every company that wanted to walk through the door, and so you’re gonna say the model is set up that you really, it’s a service industry that you offer a service for them.
So most companies I don’t invest in that become with clients. There’s been one exception. It was with a friend that I knew beforehand. He came to me with an idea. I started helping out with a patent. I thought, hey, this is a fun company. It’ll be kind of a side hustle. And I invested separate from the IP or law firm, but got connected through the law firm. So most of the other ones I’ve really spent, I come up with an idea, think it would be cool, want to get going on it, and built it up from there.
So, these are not IP driven companies, they are just ideas and it’s incidental that they have intellectual property and whether it’s worth focusing on that.
Now all of the companies, so they’re not driven by IP. Now I’m a patent or an intellectual property attorney, I see intellectual property everywhere. So every company I built has an intellectual property aspect. To give you an example, the one that I mentioned, I started in MBA school. So that was one that I started, had the idea, went, entered a business competition, had a few other people I didn’t know at the time, we all just kind of joined the group and it was just kind of a fun thing. I bought them out.
Very first patent I ever drafted, start to finish, was for that company. So I drafted it, I was still in law school, I was a law clerk. I said, hey, I don’t have the, we don’t have the funds to go hire an attorney, I know what I’m doing. I drafted that. And since then, I bought out the partners. I built it. I think it has a portfolio of 30 or 40 patents now. And that one actually is, we’ve done a lot of exclusive licensing, worked with other companies with a lot of the technology we came up with.
And a lot of the value of the business has been with the patents that we built, with the intellectual property, with licensing, and other agreements that we’ve made with other companies. So that one is very largely driven on intellectual property with primary patents. I have other companies that are much more of a brand company where you have trademarks to make sure we protect that. So it’s not that I look for intellectual property opportunities, it’s more of I look for a company that I can be excited about and want to grow and do something with, and then I usually can see where there’s a lot of areas to implement intellectual property that drives value into the business.Intellectual property is not just a shield; it's an investment. It adds value to your company, becoming a sought-after asset in mergers, acquisitions, and investments. Click To Tweet
So, okay, so let’s say you create the intellectual property or you patent your inventions and you trademark your brands and the content is copyrighted. How do you defend that? Is it easy to defend IP assets in the US and internationally or it’s kind of a challenge?
The short answer is it’s a challenge. I don’t want to sugarcoat it. It’s not an easy thing. Now, it always depends a little bit on who you’re defending it against, right? If you’re a large company and you’re defending it against a small company, if you’re a large company and have the resources, it makes it a lot easier. On the flip side, if you’re a small company and you’re defending it against a large company, you do have an uphill battle.
Now once if you’re a small company and a small company, then it’s a reasonable, you usually can come to an agreement, both of you are trying to coexist and build a market. So a little bit, it depends on kind of who you’re defending it up against. Now, the question is always, or the one that people always want to jump to is, what if Apple or Amazon or Walmart or somebody else knocks off my idea and invention, and I’m a little startup and we’re bootstrapping it, can we go defend against an Apple? And the short answer is, can you go up against an Apple straight one, or head to head most of the time? The answer is no.
Now, that doesn’t mean you don’t have options, but you have to look at other options. And so, one of the things that people often overlook is let’s say Apple you came up the next best you know smartphone changes the whole smartphone landscape everybody wants it Apple comes along they knock it off well they have a whole lot more money to drag you to court they can and they can make it so they can bankrupt you so even if you’re in the right it’s going to be hard but the other thing you do is Apple every company has a competitor Apple has Samsung Samsung is in smartphones. They do Android.
They’re a huge competitor and so a lot of times when you’re saying hey I can’t defend this myself why not go to the biggest competitor of whoever is ripping off say we got this great technology we have it our patents we have intellectual property we can’t defend it but you can and it can add a lot of value and so you let someone else do that fighting for you so there’s that option. Another one is that you can go to, and they get a bad name, and some of them absolutely deserve the bad name, is what are called patent trolls.
And there’s other ones similar with trademark trolls, where you have companies that their whole business model is built around enforcing patents, about going and getting those deals, licensing them, or otherwise taking them to court. And they’ll usually take a good, or a steep percentage, or a good percentage of the winnings, but they’ll actually go out and enforce it. So sometimes just going to those companies, if you have a strong intellectual property and patents, they’re going to go do it for you another option is you can also say sometimes the timing is not right today.
I can’t enforce it I can’t do it, but I hate I’m going I’m still making a good company I’m gonna grow it in three or four years when I am a bigger company when we do have some funds and ability to go enforce it. I’m gonna go in and actually enforce it against other people So sometimes you have to say I’m going to take I’m going to look at timing, today’s not right, we’ll continue to grow the business. When we’re at the point that we are able to enforce it, we absolutely will. So it’s all of those.
One of the other thoughts, and then I’ll take a breath, is one of the reasons why you get intellectual property is to defend your company against somebody copying it. But there’s another aspect of it where it’s an actual investment, it’s an asset of the company that can provide a lot of value to the company. So that way when you’re going to do a merger, an acquisition, when somebody else is coming in to invest in your company one of the questions are going to say is what’s proprietary about your business what error is it protected and what you know how can I invest? What assets do you have?
And so if you have a good intellectual property portfolio and you’re looking for somebody that’s going to come and buy out your company they’re going to acquire it or you’re going to do a merger or an acquisition or an investment it can actually act as an asset of the company they can invest in or they can acquire pay you for so it’s not only about enforcement, but it’s also about building an asset into the company.
No, I definitely have seen that in my prior life. I was an investment banker and we sold a bunch of companies. And whenever they had IP assets, it was an attraction. Sometimes it caused problems because it wasn’t properly protected, then it basically delayed the closing. And the investors are all paranoid about someone stealing their IP. And maybe someone has a claim on it that they are not aware of.
So that could be a real problem. In some cases, what we saw was that it was a big advantage to have the IP because the buyer wanted to have a tax, a tax beneficially, a tax advantage structure. And they said they bought the IP with one company and with another one, they bought the hard assets, another one, and then they leased the IP assets back to the company and they siphoned some money out that way.
And that was basically an offshoot or a destruction or some other way they managed to save some taxes that way. So going back to this IP, so I am a business coach and I license a system called Entrepreneur Operating System from a licensor of that system, which is turning itself into a franchise company. And, you know, there’s a lot of discussions why they are doing that. They say that they do this because they want to protect their IP.
Now, maybe there are other things as well that make them do this. So the question I want to ask you is, what are the pros and cons from a franchise owner to have become a franchise. So what is it gonna, how is it gonna help them and how is it going to harm them?
So, you’re just saying in general, what is the benefits and pros and cons of doing a franchise, is that the, is that the perspective?
Yes, from the franchisor’s perspective.
I mean, if you were to take it as a broader kind of business question, franchises, so take it an example, and I always like to give examples because it’s the easiest way for me to think of. If you’re a restaurant and you’re a solo location, restaurants are very competitive businesses because there’s a lot of them. Everybody has a great idea for a restaurant. They all think it’s going to be a success. And let’s say you build a single location and it is a success. And now you’re saying revenues are still tight.
Profit margins typically for restaurants, you’re not going to have an exorbitant profit margin. And so you’re going to say, okay, this may be a small business. It can be one that I can support myself or do okay with, but you’re not going to make an exorbitant amount of money. You’re not going to build it into an empire because it’s limited by your location. It’s limited by the amount of customers and by the foot traffic and how big your restaurant is. You have all these limitations.
And yet now you go out and franchise it, you can start to actually get an income from all the other businesses that you’re, or all the other franchisees that are building it. So you can now build a business and that’s around every franchise. Well, now you’ve proven a good business model, proven demand, you’ve proven a location and rather than going and doing it all yourself, let other people run the franchises themselves and then you can take that model you built, make an income.
So it’s kind of a win-win in the sense of franchisees are getting a model you’ve already proven out. You’re also able to expand your footprint and get additional income without having to manage it all and do it all yourself. So that’s kind of one of the things. And you can take that to a lot of other industries. Plumbing or other service industries. You can take it to landscaping. You can take it to service industries. And now you almost kind of get into the software as a service industry, which is different than a franchise, but it’s kind of that same model of you’re able to expand your empire beyond just your single location or your single customer base.Franchising is not just about scaling; it's an art of leveraging collective innovation and sharing resources to build an empire beyond individual limitations. Click To Tweet
Okay, so that’s obviously, so being able to replicate your business and being able to take a license fee or whatever franchise fee from others and essentially get a cut of their profits on top of your own business is a great approach. But what if the franchisor is already a business which is in multiple locations, it’s already replicated itself, but it’s using a licensed business model where the licensees are paying you a fee for using this thing, but they are independent, they are not highly controlled entities, entrepreneurial entities. What are the benefits of turning that organization into a franchise organization? So it’s not about the scaling, because it’s already happening. What other benefits are there for the franchisor?
I mean, it’s a little bit the old adage of economy of skill, right? In the sense that if you’re all disparate, if you don’t have something centralized, you’re able to, if you don’t, then you’re all kind of out on your own island. You’re all doing your own thing, you’re all innovating, but you’re never going to leverage what others or people are doing. So let’s say you have one franchiser that figured out a new way to do marketing and a new way to do sales.
And now you can, by having it as a franchise, by having everybody as kind of almost a collective, you can figure out what works for other people, what new innovations they’ve been doing. The other one that you can do is a lot of times you can leverage whether it’s marketing dollars and advertising dollars. So if everybody’s advertising on their own, you can only reach a very small market. But now if you pull all that money together, you can have campaigns that actually work to create a brand and something that people will go to now every location.
So I’m in Utah and I’m out on a vacation to Arizona, I see the same brand, and because I’ve been advertised to in Utah, I’m also gonna eat there. So it allows you to pull resources, learn from each other, and also be able to expand that way that I think a lot of times when you’re kind of disjointed or otherwise not doing that, you’re not able to leverage a lot of those resources to grow.
Is it legal for a franchisor to compel a franchisee to hand over their own creation to the franchise owner?
Usually, it’s legal. I mean, where it usually comes down to is it’s going to be the franchise agreement, right? And in the franchise agreement, they can put it in there and it’s legal to put it in there you can agree that any as a franchisee anything any intellectual property create that’s related to the business the franchise owns or the franchise or owns and the reason being is you know it’s kind of a bittersweet in the sense if you’re a franchisee you’re saying “Now, I’m doing all this work, I’m innovating, I’m creating and I don’t ever get any ownership structure to it or I don’t get any compensation and disincentivizes them.”
And yet on the other hand, if I was a franchisor, I’m saying, hey, I built this brand, I’m doing a whole bunch of R&D, I’m doing a whole bunch of things, I’m supporting them. And so because I’ve already come up with a concept, they’re really building on top of my concept, they haven’t created their own concept. So I should be able to maintain control of my concept, which includes intellectual property. I can make arguments on both sides.
Now, where I think it typically works the best is if you have incentive structures or if you have franchisees that as they create new innovations, as they create you know different things that improve the whole franchise system that they get compensation. That can be they get a royalty or they get a license or they get a one-time fee but something that incentivizes your franchisees to expand and make the business better while also allowing the franchise or to honor in the end keep control of the franchise so that they don’t it doesn’t go in a direction that they don’t want it to go.
Do you see entrepreneurs who are happy in a franchise situation, a franchise relationship? So entrepreneurial business owners who go into the franchise and they basically find their way of fulfilling their entrepreneurial ambitions as well?
Yes. I see people that love it and I see people that hate it. So I mean, give me a couple examples. Let’s say you are a very entrepreneur person that you like to figure things out. You like to do it your own way. You don’t like to be told what to do. Typically if you go do a franchise, you’ll do it for a few years. Then you’ll figure out the system. You’ll want to do things new. You’ll want to try your own thing and then you’re kind of locked into, you have to keep doing it the franchise way that they’re doing it or you have to get permission.
You have to go get approvals and everything else. And so they start to get unhappy because they’re feel like they can’t grow or do anything else. On the other hand, there are some entrepreneurs or startups that are saying, hey, I love the system, I love the support, I like to be able to have a… I like to not have to figure this out from the front end. You have some people that think they’re entrepreneurs, they get into it and they really figure out, hey, I don’t like to figure out pricing, I don’t like to figure out finances, I don’t like to figure out marketing. I love customer service and I love to talk with people and that’s what I want to do.
And so for them, the franchise allows them to not have to worry about a lot of those things that they don’t enjoy and focus in on being a good salesperson or going to be customer service or being a good technology, you know, building technology. And so some people, they fit well within that system and they like to have offloaded the things and don’t have to worry about the things that they don’t or don’t understand or don’t have passion. Other people are saying, I want to be able to control it, I want to do it. And so it kind of depends on the personality of the entrepreneur or the startup.
I got it. What about illegal franchises? So what I heard about that some licensors or licenses, I think they are called, they are really illegal franchises because they prescribe in too much detail what the licensees should be doing. And essentially, they are running the risk of becoming an illegal franchise and they could be sued. Do you see that happen?
Where I see it happening is a lot of times if you exert too much control, what you’re basically be doing is making everybody your employee, right? And then you have a whole different level of responsibility and criteria when you become an employee. And so if you exert a high level of control, you’re no longer autonomous, you don’t have everybody that has their own franchises, you’re really just everybody’s your employee and you have a business.
And so that’s a lot of times where you can kind of see it is depending on how you set it up, level of control, what you do and what you don’t do, it can create an issue for you of now everybody’s your employee, you have to provide healthcare benefits, you have to provide an insurance, you have to provide other benefits, overtime and everything else, whereas if you leave that as a franchisee, franchise or relationship, you don’t have a level of those responsibilities. So a lot of times where you have to be careful is you don’t exert so much control that they’re really saying, I’m not a franchisee, I’m just an employee.
Okay, that makes sense. So basically, these are different levels of control. You go from licensee is very free, they can do whatever they want. They are just using the system and they pay a fee for it. A franchisee is someone who has to follow the way the system should be used. There are guardrails and whatever they create becomes part of the franchise program. And then the employee is basically who is not even, he was just being paid by the company and it’s basically, that’s the only client they have, right? They have a single client. So that’s the different degrees. There’s nothing in between.
That’s probably the most, I mean, the other one that you can kind of get into that’s similar is independent contractor. And you kind of have the same issue. If you’re an independent contractor, it means you’re a separate third party. They’ve hired, keeps arm’s length, you’re not an employee, and you kind of have the same issue. An independent contractor, you’re hiring them for an end result, you give them the feedback, you give them the results, but you can’t micromanage them or tell them how to do it. And if you do, then they become an employee, and then you get into the same issue of, they’re really an employee, and now you take on those responsibilities.
So it’s kind of either an individual on your own and or an independent contractor is the one where you have the most freedom. And then if you get a franchisee, kind of as you mentioned, you have a looser guidelines and rules and restrictions that you have, but it’s not to the level of control that an employee has, and you can still have some autonomy. And then you get to an employee, and as an employee, generally, you can have a much higher level of control over employees, and they don’t have near the amount of autonomy. So that’s probably a pretty good summary. I’m sure there’s a few exceptions in there, but that gives you a pretty good overview.
It’s cool. But listen, I don’t know, you’re probably gonna send me a view now, because I’m asking so many specific questions here. But I want to ask one more, which is about trademarks. So you see two types of trade but you see the ones with the leader are in the circle. And then there’s a PM, and I’m a little confused about this because I understand that the R is the real thing. But can people just put PM everywhere and claim things to be their trademark, without really being there any substance or what does it take? What is the kind of the acid test for something to be a TM trademark rather than just, you know, I capitalize a couple of words and make it my own?
You can put TM wherever you want. There’s, that one’s a lot more, less restrictive now. You have to have a reasonable justification for putting TM. You can’t just think, put TM everywhere and just think you’re covered. Maybe he’s backing up. The difference between the R and the TM, R is for a registered trademark. You file it with the PTO, US Patent and Trademark Office, goes through an examination, assuming it gets determined to be trademarkable, then you have the presumption of, for your goods and services, for what you’re using the trademark for, you have exclusivity.
You’re the only one that can use that, and other people are boxed out from using it. So that’s what a registered trademark is, when you see the R with the circle. Now, TM is basically you’re saying, well, I haven’t actually registered it with the federal government. I haven’t registered it with the Patent and Trademark Office. I just think that I have some rights to it. I intend to use this as our brand. Then you’re relying on typically what are called common law rights, which are akin to state law rights, where you have some degree of trademark. If it’s a trademarkable term, you have some limited rights to that trademark.
Now, give me an example of how that works so let’s say you started the world’s best I’ll say restaurant came up with a great name we’ll call it ABC restaurant ABC is probably not the world’s best name but I’ll use that as an example and you started using in your local community and you started putting TM everywhere you win well TM will protect you for your geographic location so let’s say you were located in Detroit I’m making up again an example you’re in Detroit and now you’re operating and you have your TM.
You can probably, if you’re the first one to use it in that area, you’re the first one to come up with using ABCA restaurant, you can continue to operate in Detroit. You have the rights to it. You have your common law rights. But let’s say now somebody else says, oh I think that’s a great restaurant idea. It’s a really quick great brand and a great, I’m gonna go start one over in Los Angeles. Well if you have the TM common law rights, you can’t stop other people from doing it in Los Angeles or doing it in New York or anywhere else because you only have your common law rights.
You’re only for your geographic location that you’re using your trademark. Now, on the other hand, if you go register and get a registered trademark, you have the presumption of all 50 states. Then you can stop others if you don’t want to allow them to from doing it in Los Angeles or New York or anywhere else because you have the trademark so you have limited rights with TM for your geographic location, but they are pretty limited to scope the other issue with the TM with the common law right is.
Let’s say you start out in Detroit and you want to expand well between the time that you started your restaurant in the time you want to expand somebody else ran out and got a trademark at the federally registered trademark now you’re stopped from ever expanding, you can only stay in Detroit you can only stay where you’re actually your geographic location is and you’re not able to expand into other areas. So there’s some limitations for trademarks that are TM versus registered. You can do it, it’s limited, and so you have to think carefully about whether or not it makes sense for you.
And if I have TMs and I file claims to register it, then do I have preference over other people who may be filed after me or it’s not automatic.
So generally, and there’s a few exceptions, we probably don’t want to dive into those because they’re a lot more niche. But if you’re the first one to file a federally registered trademark, whoever files for it first is presumed to get the rights to it and you can stop others that come along after. So it’s a little bit of the first to file on a brand for given good products or services that you’re using for, you’re going to be the owner of it. So generally, whoever files on it first is going to be the owner and get those rights.
And when this company tries to expand internationally, then you say that a registered trademark will cover you in all 50 states. What about in Europe, in Asia? How will that work?
You have to file in each country individually. So Europe is a bit of an exception. They do have the EU that you can file in multiple countries within the EU and get protection there. But generally, across the world, you have to file in each country that you want to have brand protection. That’s why, an interesting side fact, Apple, as everybody knows, they had Apple Watch rather than iWatch. And the reason when it originally released is because, and I think it was China, I have to look it up, I think it was China, somebody had already had iWatch trademarked for a smartwatch such that Apple couldn’t go get a trademark for iWatch and so they started calling it Apple Watch.
Now I think that they’ve worked it out, got a licensing and now they’re acquired, but for the first three years they didn’t brand it as Apple Watch because somebody else had it in China, it was a big market so they didn’t want to do it. So same thing with you, if you want to get international protection, you have to get it for each country that you want to have the trademark.
So, one final question on this. So if someone starts a startup and they start to get going, how soon do they need to protect their trademarks? Do they have time to do it or you would urge them to do this as one of the first things that they do, that they protect their business name, their product names, to avoid any kind of mishaps with someone registering who sees that this is a great product. Let’s get, you know, you call them trolls, you know, trolls registering it and essentially hostage to this thing.
Within budgets and within reason, the earlier is always the better in the sense of locking down that name, having the rights to it is always better. Now, the reality of a startup or small business is that you always have more things to spend money on than money to spend. And so you’re always having multiple things competing for it. So within that, I would first say, first thing I would do for any business before I do trademarks or patents or anything else is I would get an LLC or a business formation, S-corp, C-corp, LLCs are kind of standard if you’re getting started out.
And the reason being is that protects your personal assets. So if you were to ever get sued or somebody to say you’re infringing a trademark or a patent or you had product liability or something else happened, they can’t come after your personal assets, they can’t come after your house or your savings. So well before I’d ever get to a trademark or something of that nature, I’d get an LLC. Now the question that you raised is when would you start to think about an LLC? Well, if you have the budgets and you have the funding, I would get it earlier on.
Now I’m gonna dispel a couple myths. One, a state registration of an LLC is not a trademark. It doesn’t give you the protection. You don’t, you can’t, just because you get the state that allows you to register your business, nothing to do with the trademark and it gives you no rights. Second thing is just because you get the URL does not mean you have a trademark and those are the two bigger misconceptions. Well I got the URL so I’m protected. No, just because you have the URL doesn’t mean somebody doesn’t already have a trademark for that.
So you always have to worry or think about that. Now within when I would start doing it, if I have limited funds and I need, I would get the company up and running. If you never have a company, a trademark doesn’t give you, do you any good because it’s never going to go anywhere. But as you start to have, get some traction, as you are starting to build a brand and you’re starting to get followers, you’re starting to build a reputation, that’s at least by that point, I would start to think about getting the trademark or I’d start to look into it.
Because as you’re building the value, now if you don’t have any followers, nobody knows your brand, you can probably hold off because it’s not that hard to reinvest or to rebrand. But the hard thing is if you wait and now you have the brand, you have the following, you have revenue and everything else, and then only come to find out somebody else owns that trademark and that brand and you really have to go and rebrand, that’s going to be an out. So kind of before you get to that level where you’re getting that followers and that brand and that reputation, you’re going to want to go after it.
That sounds great. Let me ask you this, as an entrepreneur, what is your pinnacle? You can see it in the background. So what is the big mountain that you are climbing? What is your vision? Where do you want to take your business, your businesses, your practice? Do you have something specific in mind?
Every business is a bit different. Overall, what I’d like to do is one, have enough diversity, general goals or general kind of peaks. I’m working towards having enough diversity within the businesses that if one business is struggling or one business isn’t doing well, that I have enough diversity of revenue stream that I can still say, okay, I’m okay. I’m not going to be taken down by one of the businesses.
So that’s me in general. Now for each of the businesses, I have kind of a different mountain, I would say, that we’re climbing. Law firm, I’m looking to shake up, do things differently than most other law firms, and that includes automation, how we set it up, what products and services we’re offering. For some of the other ones you mentioned, as an example, the SmartWolf, that’s going to be, we have a big mountain to climb on the technology and implementation and how we’re doing that, and that’s really the core of the business.In entrepreneurship, diversity is the safety net. Climbing different mountains for each business, my goal is autonomy – ensuring one peak's struggles won't bring down the whole range. Click To Tweet
Every business, I have different goals, different mountains to climb that I’m hitting on and then I have an overall personal goal for myself of having enough diversity between the businesses that I can really have that autonomy and be able to have that diversity. So I don’t know if that answers your question, but that’s kind of the mountains in general to climb.
So, are you living your ideal life already?
Short answer is yeah, I love my life. So I love being an entrepreneur, I love running my own business and I wouldn’t have it any other way does not by any means I mean any means mean that I don’t have good days and bad days or good months and bad months and that we don’t have those ups And downs, you know, I always used to say that was a roller coaster and you know, then I had somebody else So I’m not taking credit. I said, you know, it’s really is a startup or small business.
Not really roller coaster It’s more of the whole theme park, you know get into the parking lot. You’re excited to get going and get into the park and then you ride a few roller coasters and you’re having a great time and then you get off the roller coasters and you’re sick and you have to take a break and take a sit down for a minute then you jump on the bumper cars and get banged around a whole bunch and everything else.
I found that to be true with almost every startup is it’s really the whole theme park and yet for me I love it it’s what I’m passionate about it’s fun to get up for me in the morning and every week, I don’t have those “Oh, I have to go into the office on Monday and I don’t want to do this anymore and it’s terrible. On the quite the opposite, I’m excited to get in the office because every day I get to go tackle something new and improve the business.
Awesome. Well, lots of great information. So, Devin, if someone would like to learn more, maybe it’s impossible, but I already asked a lot of questions, but if they want to have a specific situation, I’d like your help on this, or they want to learn about how you handle things and your ideas to check you out, where should they go? Where can they find you?
So easiest way to find me, I’ll give you a couple ways. So if you want to reach out to me, let’s say you have questions about patents or trademarks, intellectual property, anything else, I offer a free strategy meeting where we sit down for a few minutes, go through what you’re doing. You can just go to strategymeeting.com. So that’s an easy way, links right to my calendar.
Grab some time on my calendar, always happy to chat, free of charge. If you want to find out more about just the law firm in general, kind of see what our prices are, learn a little bit more about patents and trademarks and kind of get a feel for the landscape, you can just go to lawwithmiller.com and that one is another place that you can find out a lot of things. So, reach out to me directly, schedule some time, go to strategymeeting.com, learn more about the law firm in general and what we do. Go to lawwithmiller.com.
That’s awesome. Okay. Well, definitely, listeners, check Devin out. He’s got lots of great information, lots of energy. If he puts that behind your company, that’s definitely going to accelerate. And if you like the show, please subscribe on YouTube or on Podbean or Apple Podcasts, and please write us a review. We’d love to have your review. And Devin, great to have you on the pod. Thank you for coming. And next week we’ll have another great interview.
Have a great day. Thank you for having me on, I had a pleasure.
- Pinnacle: Five Principles that Take Your Business to the Top of the Mountain
- Devin’s Website
- Devin’s LinkedIn
- Book a Free Consultation with Devin
- Steve’s soon-to-be-published book
- Steve’s blog